Not all Contractor Accountant services are the same.

Regardless of whether you’re new to the contracting game or have already been playing awhile, at some point you’ll probably have considered enlisting the services of a contractor accountant.

But which services should you be looking for and is it really true you get what you pay for?

Service vs price – delve a little deeper into what you’re really getting

When shopping around you may initially be attracted by price, and it’s tempting to go for the cheapest option. Whilst this can be appealing, (especially if you’re first starting out) it’s worth considering how much bang you’re really getting for your buck.

Afterall, a cheap service will soon lose its sparkle if you discover it doesn’t provide all the things you actually need. There’s a reason why some contractor accountants charge more than others, and it’s all down to what’s included and the level of service you can expect.

Are the essentials included?

Consider the services you really need – both personally and professionally. There are some basics every accountant should provide, and we advise that you ask each whether they’re included as standard within their monthly price or at an extra cost. These include:

Unlimited expert advice and support from a dedicated Personal Accountant (not an account manager or call centre)

Your contractor accountant should be a qualified expert who can keep your accounts in check, be there to remind you when things need to be done, but also make you aware of any opportunities for better tax efficiency and optimising your contractor take home pay.

Sounds simple? Sadly not for every accountant! Having a direct line to your own personal accountant is not a given, and you could find yourself being passed from pillar to post through a call centre, or end up in the hands of an unqualified account manager.

Not ideal when it’s your business and personal finances you need instant advice and support about. You should always feel safe in the knowledge they’re ready to talk to you, whenever you need them, and never feel like you’re having to manage them.

Here at Intouch we provide all of the above, plus much more! From speaking to your own dedicated Personal Accountant from the outset to being transparent about what’s included in our monthly service for £105+VAT, we pride ourselves on informing all potential clients exactly what they can expect with us from day one – so nasty surprises! That’s part of the Intouch Promise.

Our team of experts are ready to answer any questions you may have about our service and how we can help you achieve your contracting goals. Call them today on 01202 375 562, or live chat / email them here.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Secrets to success and productivity

In our last blog we highlighted the top seven secrets to productively, as shared by 200 ultra-successful people – including a few billionaires and Olympians. As a Limited Company contractor looking to win and impress clients, you’ll find these tips useful.

In this blog we look at the next seven answers these people gave to the following question:

‘What are your secrets to success and productivity?’

8. How many balls are you juggling?

It should only be the one. Ensure you’re only ever working on the most important task at any one time, then allocate your remaining time to any other tasks in relation to their importance.

Remember that your understanding of importance may be different to that of your client’s, so cross check your priority list with theirs to avoid any misunderstandings.

9. Keep a notepad with you at all times

How often have you thought of a great idea, then completely forgotten it?! Be it virtually on your smartphone or an actual notepad and pen, ensure you have the tools to capture those great ideas before they escape you.

10. Touch things once

Be honest, how many times have you opened an email or started a new task or project, only to walk away from it a few moments later, thinking ‘I’ll deal with that later’. If you’re human (and we’re fairly sure you are!) you’ll be able to relate to this.

Consider how long each task will take you to finish, then get on with it. It will help your time management, free your time up for other things and above all, make you feel pretty smug for completing it!

11. Find your energy source

Some people swear that their 5am run does wonders for their energy levels throughout the rest of the day. (Apparently) they feel energised, more focused and sharper to take on the task at hand.

Whilst you may not be a super keen runner, there’s something that can be said for for finding a passion and routine that gives you that extra boost throughout the day. Food gives you fuel, sleep gives you recovery and exercise can keep you focused – so create your own perfect energy source today.

12. Follow the 20/80 rule

From those successful people questioned in the study, many described following the ‘20/80 rule’. This is where 80 percent of results come from only 20 percent of activities. As a successful contractor you’ll know which activities will drive the greatest results. Remember to focus on these tasks and ignore the rest.

13. Your morning routine is everything

Habits breed behaviour patterns, so if yours is positive and provides you with a good start to the day, then your day will follow suit.

Have breakfast, drink plenty of water, take five minutes to replenish your mind and prepare yourself for the day ahead. Nurture your body and mind for a productive day.

14. Delegate

So delegation isn’t always suitable when you’re contracting, but in your everyday business life it certainly can be. Instead of thinking ‘how can I do this?’, consider ‘how can it be done?’

Take your accountancy needs for example – why spend hours trying to get your head around complicated and time consuming accountancy, when there are specialist contractor accountancy firms out there who will keep you compliant and up to date with the latest legislation, whilst ensuring you take home your maximum contractor pay.

No one likes to feel overworked and overwhelmed, so try some of these tricks and tips today.

Got some of your own tips that have rocketed you to Limited Company contracting success? Share them with us! We’d love to hear what you do to ensure you’re at the top of your game.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Are you getting what you deserve from your contractor accountant?

As a busy contractor you need an accounting service that can seamlessly manage your accounts, whilst keeping an eye open for opportunities for you to get more from your company. Maximising your take home pay is probably one of the main reasons you decided to go Limited, and so the supplier you’ve entrusted to manage your accounts should always be there for you, ensuring that the service you receive is second to none.

Is your current accountant letting you down?

If you recognise any of the following in your current accountant, it’’s a good idea to shop around:

You speak to someone different each time when trying to discuss your accounts

You get generic answers that aren’t tailored to your circumstances

You’re provided with confusing or misleading information

You’re paying a premium rate for a substandard service

You get charged for hidden extras

Your documents to HMRC or Companies House aren’t provided on time

You feel that you’re managing your accountant, rather than them managing your accounts

Your trusted contractor accountant should help you free up your time to do what you do best, not take up more of your time by making you worry about your accounts.

Are all opportunities being explored?

A good accountant should always be helping you maximise the opportunities that are available to you, keeping your best interests at the forefront of everything they do. From HMRC’S upcoming changes in the ways travel and subsistence claims will affect you, to what you can do to ensure your expenses are genuine and compliant, your accountant should not only be managing your day to day accounts but also your future wellbeing.

Intouch’s Accounting’s role for freelancers and contractors

Our role is to make your life easier, by providing you with a personal service that not only includes 24 hour access to time saving technology developed specifically for contractors, but also great advice direct from your dedicated accountant. You can wave goodbye to all the negative experiences you’ve had with your current accountancy, as we can ensure that the direct line to your Personal Accountant is there from the moment you join us. With a wealth of knowledge from an accounting team that has an in-depth history of working with Limited Company contractors from a whole range of industries, you can rest assured knowing that your accounts are in the best possible hands.

What you’ll get from Intouch

For an all-inclusive monthly fixed fee of £98+VAT you’ll get all the help and guidance you need to run your Limited Company smoothly:

Clear and timely communications to keep you on track throughout the year

As many free IR35 contract risk assessments as you require

No question is too small or too big! Your appointed Intouch team are here to guide you and answer any questions you may have

What’s involved in switching

Changing accountant is easier and quicker than you may think. Once you’ve appointed us, we will notify your current accountant and obtain all of the required handover information, meaning that you won’t have to worry about any difficult conversations or obtaining paperwork.

We do what we can to make the cost of switching over to us as efficient for you as possible. Our switcher fee calculator will determine whether any fees will apply to you. We see the value of our relationship with you in the future and not in the past, and that’s why we can guarantee at least a 25% saving on switcher fees.

Still not sure if Intouch is for you?

We’re confident that when you switch to Intouch it’ll be the last time you appoint a new contractor accountant. If you’re still a little unsure take a look at why our clients have chosen Intouch, or download our free guide to help you decide which accountant is right for you.

Ready to make the move? Call us on 01202 901 186 to speak to a dedicated adviser about switching.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

P11D forms are made simple by Intouch

We’re now just over a month into the new tax year, and like many contractor accountants we’re busy preparing P11D forms for our clients. In prior years this process has been quite time consuming all round, but thanks to ongoing Intouch developments the whole system is now quite painless for our clients.

The questionnaire we have developed will automatically gather the data it requires from the client portal, so we don’t need to ask clients the same questions twice, there’s no need for them to search around to find anything else they may need, and each form is then reviewed by their Contractor Accountant before being submitted to HMRC. This allows us to offer advice every step of the way, and spend our time helping and advising rather than getting bogged down in paperwork.

Our first P11D submission was in fact made within a couple of hours of us releasing the form, from a happy client who has been with us since we started back in 2010….

“Yet another example of the well designed and easy to follow processes that Intouch offer. The whole portal experience stops me having to worry about my finances and lets me get on with running my business. I have never regretted choosing Intouch for my accountancy. They are responsive and easy to talk to and always there when I need them and they offer excellent value for money.”

As a thank you to the client we’ve awarded £150 in Amazon vouchers. The first 500 submissions of the P11D questionnaires will also be entered into a prize draw where 4 more lucky clients will win £100 of Amazon vouchers, we’re hoping this will help show our other clients how easy the process is, and that there’s a benefit to getting it done early!

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Personal tax calculations and payments on account

If you are a director then you will be obliged to file a tax return each year, and will need to pay any tax that is due thereon as a lump sum on 31st January. You normally have to wait for your contractor accountant to calculate your tax for you, but if your income is a simple mix of salary, bank interest and dividends then it’s easy to estimate the amount yourself.

Calculation

Dividends are tax free in the basic rate band, and then taxed at 25% of the net value in the higher rate band.

To work out the amount of your dividends that fall into the basic rate band you simply take the higher rate limit of £41,450 (for 2013/14), reduce by any other gross income, then divide by 10 and x by 9.

So £41,450 less a salary of say £12,000 and gross bank interest of £400 leaves £29,050 /10×9 = £26,145.

If you’ve taken dividends of £40,000 then deduct the basic rate amount of £26,145 to leave £13,855. Your liability will be 25% of that, so £3,463.75.

This will be payable in the January following the end of the tax year – so for the year to 05/04/2014 the tax will be due by 31/01/2015. HMRC will pay you interest if you pay early, and probably at a higher rate than your bank would!

If you have income exceeding £100,000, benefits in kind, self-employment, foreign income, rental income, other dividend income, capital gains etc. then the calculation gets more complex, so discuss with your contractor accountant if you want an early estimate of your liability.

Bear in mind that your liability may also be increased if you have a student loan to repay, or you have Child Benefit that is being reclaimed.

Payments on account – a word of caution

What catches many people unaware is the additional tax that may be due because of payments on account, especially if it’s their first year in the self-assessment system. You may have to pay not only the tax due on your higher rate dividends as above, but also a 50% payment on account. If your liability is already significant, this can increase it further and come as quite a shock if you don’t find out until the last minute. A further 50% is then also due in July of the same year. These payments will be offset against your liability next year, but can still cause a major cash-flow issue in the meantime.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Universal Credit

Last year saw the introduction of Universal Credit, which is the largest overhaul to the benefits system since the 1940s and which could affect up to 8 million people. The concept behind the new system is to “make work pay” so that people are not trapped on benefits because they would lose money if they got a job. The system will combine six working-age benefits into the one new Universal Credit, so it is expected to be easier to run as well as reducing the incidence of fraud and error. As with most new systems that involve HMRC, we’ll wait to see if what is expected actually happens!

Universal credit will be paid monthly, and claimants will be expected to manage and budge their own payments, for example to landlords if they are in receipt of rent benefit. This is supposed to make the payment received feel more like wages, thus preparing the claimant for the way things would work if they were employed.

In order to claim Universal Credit you have to apply online, and all data thereafter is also kept online. This is where your part in the process may kick in, as it interacts with RTI (Real Time Information) and your obligations if you’re an employer. You must ensure your RTI returns are complete, accurate and submitted on time because the data will be used in Universal Credit claims. You may not be claiming yourself but you may have staff, and for them it’s vitally important that HMRC have the correct information.

Universal Credit is being slowly introduced between 2013 and 2017, so there’s plenty of time to see how the system will work in practice, and to see what interesting things go awry along the way!

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Pensions, net or gross

Contractors often pay into a pension as a way to lower their overall tax liability, but many do not understand that the way the payment is made, and who the contract is between, has implications on how the tax relief is obtained. We advise checking to ensure yours is being treated correctly.

Employer Contribution

The pension provider should be informed, in writing, that the contribution is an Employer contribution and that it is being made gross. The contract will be in place between the Employer and the Pension Company, and payments should be made direct from the Employer’s bank account.

A contribution of £800 increases your pension pot by £800.

An Employer contribution is a tax deductible expense for Corporation Tax purposes, meaning the company profits are reduced by the value of the contributions and the company pays less tax as a result.

Employer contributions are also a deductible expense for IR35 deemed salary calculations, which can come in exceptionally handy, and reduce the tax due by a large amount.

Personal Contribution

If you pay into a pension personally then nothing goes near your Limited Company at all. You personally pay the pension provider a net amount, and the pension provider then reclaims 20% tax from HMRC.

A contribution of £800 increases your pension pot by £1,000.

Personal contributions also increase your basic rate tax band, meaning you can earn more money before you cross into higher rates. A pension contribution of £800 will increase your basic rate tax band from £31,865 to £32,865, so you’ll pay a lower rate of tax on that portion of income. This is useful if you’re a higher rate taxpayer. If you’re not then this relief will be wasted, and you should consider whether you would be better off making Employer contributions direct from your company or increasing your personal income to take full advantage of the relief. There is a delicate balancing act to taking an extra dividend to pay into your pension – ask your contractor accountant if you’re not sure of your calculations.

Are you paying net or gross? As an employee or an employer?

Check with your Pension provider. If your payments are being treated as net but are being paid through your company then you’re getting tax relief twice and could be in for an unexpected tax bill if HMRC realise.

You should also keep in the mind that the overall limit for your pension contributions, which has just dropped to £40,000 for 2014/15, covers both those made personally and those made by your employer.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Tax return pitfalls

We’re now into the 2014/15 tax year, which must mean it’s time to start thinking about the joy of completing your 2013/14 tax return! Many contractors will leave this task to their contractor accountant, but if you do complete it yourself you should be mindful of a few common mistakes. Here’s our lucky top 13.

A tax return is a summary of all income received during a year, regardless of whether or not it has already been taxed. Make sure to include bank interest and other taxed income as it can affect the rate of tax you pay on your untaxed income. You can however ignore an ISA.

If you had a student loan with a balance outstanding during the year make sure you include it. You will need to repay the loan at the rate of 9% on any income above £16,365, so check now to see if you’re better off simply repaying the loan in full – the tax return will calculate the 9% regardless of the loan balance, and it’s a long process to get any overpayment refunded.

Do you own a property and receive rental income, but make an overall loss? If so, make sure it is included so that HMRC are aware you have losses to carry forward against future profits.

If this is your first year of filing a tax return, have you got a Government Gateway account, and registered for Self Assessment? If not, do it now. It can take weeks to set up, so leaving it to the last minute could mean you’re unable to file on time.

Do you want your tax collected through your tax code? Make sure you file by 30thDecember (not the 31st!)

Changes to the Self Assessment system in 2013 mean that you now have to declare Child Benefit if you or your partner earn over £50,000. Make sure you know the rules of who has to declare and repay the benefit.

If you were in a Partnership during the year make sure you file a return for the Partnership itself too. If you don’t, it will be subject to a £100 late filing penalty just like an individual would.

Have you included all employments during the year? One of the common mistakes we see with new contractors is that they include their own company income but forget to include the details from their old employer (check your P45 for the information you’ll need).

Remember that dividends are received net of a 10% tax credit and must be grossed up before being added to your return. A dividend of £1,000 is actually £1,111 with tax paid of £111.

Did you receive Jobseekers Allowance or other taxable benefits in the year? Make sure these are included too. You should have a P45 or P60 from the Job Centre with the details.

Do you pay into a personal pension? Include the details on your return and it will increase your basic rate tax band, potentially decreasing the tax you owe. Be careful though, pension contributions made by your employer do not get included here.

Donations to charity also increase your basic rate band and should be included on your tax return. If you’re not a UK taxpayer though you should check whether they are being made under the gift aid scheme, as you’ll be liable to pay the tax on the donation if they are.

If you owe tax for a prior year make sure it’s included on your return, otherwise HMRC could refund you only to ask for it back later, which confuses things all round.

Remember that even if you do ask a contractor accountant to complete the return for you, it’s still your legal responsibility to check it is correct as you will be the one held accountable for any errors or omissions. Review the return and check it through before you sign it!

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Paying income tax through your tax code

If you are a director of a Limited Company then you will need to file a tax return each year and, if there is tax owing, you will need to make payment to HMRC. If your liability is less than £3,000 you can apply to have this collected through your tax code rather than paying it outright, provided you file your return before the 30th December. This will mean lower net wages for you during the next year, and higher payments to HMRC each quarter.

This payment option should be used with caution though, as HMRC have the right to refuse and they may not actually tell you that they’ve done so until after the payment deadline has passed, leaving you with interest and potentially penalties.

A recent First Tier Tribunal Case, Ross v HMRC (2014), underlines the fact that HMRC are permitted to refuse a coding request if it would result in a K code being issued to the taxpayer that would deduct more than 50% of their income in tax. Other reasons they may refuse a request are:

If you don’t have enough PAYE income to enable HMRC to collect it.

If you would end up paying more than twice as much tax as you normally do each time you receive your pay or pension.

You should look at your level of salary and estimate the tax that will be due, and that will guide you as to the maximum amount that can be collected through your code. On a salary of £12,000 that’s just £400 – anything in excess of that would be over twice the tax you normally pay, and therefore could be refused.

The moral of the story is that even if your liability is below £3,000 you should not assume it’s safe to tick the “collect through tax code” box and then forget about it. The first you’ll know of an HMRC refusal will be a penalty notice when your payment is late, so it is essential that you keep an eye on your Government Gateway account to ensure it has gone through.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.